Major players such as JPMorgan Chase & Co. and Citigroup Inc. are expected this week to report second-quarter profit gains, a U-turn from a year ago when they were girding for a wave of COVID-19–related loan defaults, the Wall Street Journal reported. At the same time, there are obstacles. For example, the trading businesses that thrived in the chaos of the pandemic are slowing down. JPMorgan and Goldman Sachs Group Inc. report results on Tuesday, followed by Citigroup, Bank of America Corp. and Wells Fargo & Co. on Wednesday. Morgan Stanley releases results on Thursday. A year ago, banks were socking away billions of dollars to prepare for soured loans. But as the economic outlook has brightened, banks have started releasing reserves, boosting their earnings. Banks could report second-quarter per-share profits that are 40% higher than the same period a year ago, according to analysts at Keefe, Bruyette & Woods.
The federal eviction moratorium is set to expire at the end of this month, which doesn't leave much time to help an estimated 7 million tenants who are still behind on their rent, NPR.org reported. Efforts have been stepped up to distribute some $46 billion in emergency rental assistance, and to head off eviction cases before they end up in court. Shelley Miller, of the Alexandria Eviction Prevention Partnership in Northern Virginia, says it's a challenge. Her group, which includes several local nonprofits, has been working with city agencies and landlords since last year to help tenants at risk of eviction. "It's been a rough go," she says. "Nobody was prepared for this on any level, any front." Biden senior advisor Gene Sperling warned that the country is in a race with time, with emergency rental aid only trickling out. "We are asking our states and local governments to do everything they can to fill that void in a hurry," he said. "Some are ramping up admirably. Some are lagging. But we all have to do better." The Treasury Department reported last week that only $1.5 billion of an initial $25 billion in emergency aid had been spent by the end of May. More money has started to flow since, but state and local governments have taken months to get their programs up and running. Housing advocates say the next few weeks are crucial. One big challenge is getting the word out more widely that help is available. A recent Urban Institute survey found that a majority of tenants and 40 percent of small landlords don't even know about the emergency rental assistance program, which is available through next September.
More than nine million Americans said in May that they wanted jobs and couldn’t find them. Companies said that they had more than nine million jobs open that weren’t filled, a record high, the Wall Street Journal reported. As the economy reopens, the process of matching laid-off workers to jobs is proving to be slow and complicated, a contrast to the swift and decisive layoffs that followed the initial stage of the pandemic in early 2020. The disconnect helps to explain why so many companies are complaining about having trouble filling open positions so early in a recovery. It also helps to explain why wages are rising briskly even when the unemployment rate, at 5.9% in June, is well above the pre-pandemic rate of 3.5%. The relatively high jobless rate suggests an excess of labor supply that in theory should hold wages down. This has implications for policymakers: Sand in the wheels of the labor market could cause inflation pressures that spur Federal Reserve policymakers to pull back on low-interest-rate policies meant to support growth. In the longer run, on the other hand, the slow matching process could have benefits, leaving workers in jobs they prefer and the economy more efficient. Several factors are behind the development: Many workers moved during the pandemic and aren’t where jobs are available; many have changed their preferences, for instance pursuing remote work, having discovered the benefits of life with no commute; the economy itself has shifted, leading to jobs in industries such as warehousing that aren’t in places where workers live or suit the skills they have; and extended unemployment benefits and relief checks, in the meantime, are giving workers time to be choosy in their search for the next job. A recent ZipRecruiter survey found that 70% of job-seekers who last worked in the leisure and hospitality industry say they are now looking for work in a different industry. In addition, 55% of job applicants want remote jobs. An April survey of U.S. workers who lost jobs in the pandemic, conducted by the Federal Reserve Bank of Dallas, found that 30.9% didn’t want to return to their old jobs, up from 19.8% last July. (Subscription required.)
The COVID-19 crisis, which prompted a wave of retail bankruptcies and nationwide shutdowns, swallowed a whole season’s worth of unsold goods, Bloomberg News reported. That has opened the door for Hilco and Gordon to run sales -- not for the retailers that usually hire them, but under their own nameplates. Shopper’s Find, as the stores are called, are sourcing directly from manufacturers or wholesalers stuck with piles of last season’s fashion and other extra goods. “As more and more stores are closing, there are fewer outlets for inventory,” said Ian Fredericks, the head of Hilco Global’s retail group. When Hilco and Gordon Brothers run their mainstay liquidations, they step in to manage and oversee stores’ operations. That involves not just tasks like displaying merchandise and running the cash register, but adding inventory from vendors to round out what’s available -- bringing in socks, for example, if you are selling shoes, Fredericks said in an interview. Those contacts have proved useful for both sides now that manufacturers need to offload mountains of stuff and the liquidators have found no shortage of cheap rents for spaces to run a new type of cut-rate sale.
One of the federal government’s largest student loan servicers just called it quits, the New York Times reported. The Pennsylvania Higher Education Assistance Agency — which oversees the loans of 8.5 million student borrowers — said yesterday that it would not renew its contract with the federal government when it ends later this year. The agency, which is known to most borrowers as FedLoan, is one of several companies the Education Department pays to manage the government’s $1.59 trillion student loan portfolio. About 23 million borrowers aren’t making payments right now because of the temporary pause put in place because of the pandemic — and FedLoan’s announcement will only increase the pressure to extend the moratorium. The pause on payments and interest could expire in less than three months — as soon as Sept. 30. The millions of borrowers whose loans are overseen by FedLoan, including those in the Public Service Loan Forgiveness program, will have to be moved to a new servicer at the same time the machinery of payment processing is getting back up to speed. Turning the switch back on for tens of millions of borrowers was already going to be a monumental task, so consumer advocates and some legislators have been calling for the payment pause to be extended. They argue that the economic recovery has been uneven and that loan payments would have to resume just as other pieces of the pandemic safety net — including eviction moratoriums and enhanced unemployment benefits — are being dismantled. Democrats from both chambers of Congress wrote a letter to President Biden last month urging him to push payments off until at least March 31. The Education Department declined to comment on whether the situation would delay the resumption of payments. But advocates for student borrowers said it is crucial that the system have more time.
The 349 commercial chapter 11 filings in June represented a 42 percent increase from the 246 filings in May 2021, according to data provided by Epiq. Total commercial filings in June increased 11 percent to 1,983 from the 1,791 commercial filings in May. Conversely, the 34,269 total bankruptcy filings in June represented a slight decrease from the 34,767 total filings recorded the previous month, and total noncommercial filings of 32,286 for June represented a 2 percent decrease from the May 2021 noncommercial filing total of 32,976. Total bankruptcy filings were 216,931 during the first six months of 2021, a 27 percent decrease from the 298,121 total filings during the same period a year ago. Total consumer filings also registered a 27 percent decrease, as the 204,767 filings during the first half of 2021 were down from the 280,636 filings during the first six months of 2020. The 12,164 total commercial filings for the first half of 2021 represented a 30 percent drop from the commercial filing total of 17,485 for the first half of 2020. The 2,167 total commercial chapter 11 filings during the first six months of the year (Jan. 1-June 30) were a 40 percent decrease from the 3,610 total filings during the same period in 2020, according to data provided by Epiq.
The White House, along with state and local governments, is under growing pressure to significantly ramp up the amount of emergency rental relief reaching tenants and landlords, as some economists and housing advocates say that the Biden administration’s attention to the eviction crisis is coming too late, the Washington Post reported. Weeks before an eviction moratorium put in place by the Centers for Disease Control and Prevention expires on July 31, much of the federal aid meant to help tenants and landlords has not reached them. Many are not even aware that the assistance is available, or they continue to struggle with onerous and complicated application rules. Some programs run by state and local governments took months to get up and running. All told, Congress has appropriated roughly $46 billion for emergency rental aid. Of the $25 billion appropriated in December, only $1.5 billion had been spent on rent, utilities and arrears between January and the end of May, according to figures released Friday by the Treasury Department. Treasury does not yet have data on how much of the other $21 billion has been spent, according to an agency official.
U.S. employers posted a record-high number of open jobs for the second straight month as a rapidly rebounding economy generates intense demand for workers, the Associated Press reported. The number of available jobs on the last day of May rose slightly to 9.21 million, from 9.19 million in April, the Labor Department said Wednesday. That is the highest since records began in December 2000. The previously-reported figure for April of 9.3 million was revised lower. The number of people quitting their jobs slipped in May from a record high in April, but remains elevated. And the percentage of workers getting laid off hit a record low in May, the report said. The figures point to a tight job market, with employers forced to pay more to attract workers yet still struggling to fill open jobs. And many workers are leaving jobs for better-paying positions at other companies. It’s unusual for such dynamics to have kicked in with the unemployment rate still elevated at 5.9% in June, as the government reported last week.
Shares in so-called meme stocks with a following among retail investors lost ground on Wednesday, with AMC Entertainment shares down 8.1%, on track for their fourth straight day of declines, and GameStop Corp. falling 4.9%, Reuters reported. AMC, which fell almost 12% in the previous three sessions, hit a record high of $72.62 in early June as members of social media platforms including Twitter and Reddit's WallStreetBets urged each other to buy the stock. The cinema operator, which on Tuesday scrapped a shareholder approval request for an increase in the number of shares outstanding, was trading at $45.91 after breaching its 30-day moving average. AMC was still up about 2254% year-to-date but well below its 3624% peak gain. Shares in video game retailer GameStop traded at $189.79, compared with its Jan. 28 record of $483 when investors betting against the stock were forced to buy it to cover their bets as retail investors piled in. GameStop shares have steadily declined since it announced quarterly results and flagged upcoming share sales in early June. It was last up 906% for the year-so-far compared with a roughly 2464% peak gain. "The momentum is fading and the enthusiasm is fading," said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Conn. "They've been pushed well beyond the appropriate fundamental valuation levels so we're starting to see some air come out."
